A leading accountant offered ways that companies should begin to prepare for international accounting changes that are expected to become requirements when the U.S. Securities and Exchange Commission announces guidelines and deadlines for those guidelines later this summer.
The ‘SEC Roadmap’ is expected to include a date by which U.S. companies will be required to move to International Financial Reporting Standards, said Lisa Filomia-Atkas, a partner, financial services with Ernst & Young, New York. The date is anticipated to be around 2013 with public companies in the U.S. given the option to implement as early as 2011, she added during a presentation here.
Since 2 years of balance sheets may be required for comparison purposes, companies may need to begin submitting IFRS-compliant financials starting in 2010, she explained. However, according to Filomia-Atkas, when foreign filers were required to file with the SEC, that Washington-based regulatory body only required one year of comparative information, so there might be some leniency.
Even as the industry awaits direction from the SEC, questions remain such as whether non-public companies will be impacted,and if they are, whether public companies will be required to comply with new international accounting standards first, followed by non-public entities.
Additionally, once companies are complying with standards governed by the International Accounting Standards Board, London, and when U.S. GAAP accounting goes away, Filomia-Atkas asked, will the Financial Accounting Standards Board, Norwalk, Conn., also go away, or will it become part of another global entity governing accounting?
Filomia-Atkas said she is aware of companies that are starting an impact assessment and maintained that many companies will begin approaching their boards this fall both to inform them of the need to take action and establish governance structures, as well as obtain funding to begin to create the accounting systems that will be necessary to prepare for the new accounting standards that may be implemented.
There are steps that companies should begin to undertake, Filomia-Atkas said. These include doing a cost benefit analysis of a new system. The cost of preparing accounting systems could be greater than the cost companies recently experienced for complying with the Sarbanes-Oxley Act, she noted.
And, because of SOX, she added, the change in processes will need to be done in “a well controlled manner.”
Among points that companies will need to look at, Filomia-Atkas said, are changes to accounting systems and disclosure, new accounting policies and tax and regulatory decisions.
Companies will need to decide whether to use spreadsheets or to imbed changes to reflect IFRS in the technology used in accounting systems, she added.